Schwieterman: Employment numbers support feeder cattle

Corn                                              Estimated Fund Position
Trends
Short Term: Up                          Net Long Futures and Options: 3333
Long Term: Down                     Change: +3000
Overnight Trade: K +2 @7:30 AM

The bull spreaders came back to the market yesterday, which helped the May corn close positive and post a nice reversal on the chart. The December contract didn’t fare so well and made another new low for the move. This morning traders are waiting for the USDA numbers and wondering if USDA will cut the export estimate again. Most likely we end up with a dull report and traders go back to looking at the strong basis and threat of large new crop stocks and keep the bull spreads working.

Wheat                                          Estimated Fund Position
Trends
Short Term: Down                     Net Long Futures and Options: -71171
Long Term: Down                      Change: +3000
Overnight Trade: Chicago: K -2 KC: K -2 @7:30 AM

The wheat made a nice bounce yesterday, but unfortunately it wasn’t enough to convince anyone that a bottom has been made. We are going to have to see something friendly from the USDA or some strength in the corn to keep the market moving higher. We have to have more than just one week in a row of good export sales. The bulls should cross their fingers for a higher feed usage estimate.

Soybeans                                     Estimated Fund Position
Trends
Short Term: Up                           Net Long Futures and Options: 121099
Long Term:Up                             Change: +3500
Overnight Trade: K Unch @7:30 AM

The soybeans are still creeping towards the recent highs. The big export sales numbers are very supportive as are the domestic crush numbers. USDA should increase the export estimate today and if they don’t our sales will probably be over the current estimate by the next report. Buy breaks.

Live Cattle
Trend
Short Term: Down
Long Term: Down
Opening Calls: Mixed

Live cattle futures closed moderately higher on all but the April contract on Thursday. Cutout values continued higher at a much slower rate than the previous 3 days. This morning’s employment numbers were much higher than anticipated, which could boost deferred live cattle interest. Recent strength in the Dollar is likely to curb some of the export business but weekly totals were solid at 15.5 mt. open interest in the cattle was up 4,695 on Thursday, suggesting new buyers.

Feeder Cattle
Trends
Short Term: Down
Long Term: Down
Opening Call: Mixed

Feeder cattle futures, like the fats were higher in all but the lead contract on Thursday. This morning’s 11 am grain report is expected to be the near term market mover in the feeders. Employment numbers should support but the corn and fats will be the near term key. Cash index levels have declined two days in a row. Empty pins in the south are growing in numbers, suggesting demand could improve as the lots dry out.

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